Citi Bike, Needing Millions of Dollars, Looks for Help

Leaders Seek to Rescue New York's Bike-Share Program

The harsh winter took a toll on the Citi Bike ridership numbers.
Associated Press

By

Laura Kusisto,

Eliot Brown and

Andrew Tangel

March 20, 2014 10:08 p.m. ET

Leaders of Citi Bike are moving quickly to raise tens of millions of dollars to rescue the popular bike-share program as it loses money, according to people familiar with the matter.

Leaders of New York's Citi Bike are moving quickly to raise tens of millions of dollars to rescue the popular bike-share program as it loses money. Andrew Tangel reports on the News Hub. Photo: Getty Images.

Citi Bike's bright blue bicycles have become a seemingly indispensable part of some city neighborhoods, but its managers don't believe it can survive if it doesn't become more appealing to tourists and expand to new neighborhoods, the people familiar with the matter said.

Poll

The program's leaders have approached officials in Mayor Bill de Blasio's administration about raising Citi Bike's rates, the people said.

Earlier this month, Polly Trottenberg, the city's new transportation commissioner, said the bike-share program faced "a number of financial and operational challenges," though she didn't detail them.

"We are working as diligently as we can to help the company resolve them and strengthen the program going forward," she said March 6 during an appearance before the City Council's transportation committee.

Asked for comment Thursday, the city transportation department provided a statement identical to a portion of Ms. Trottenberg's earlier testimony.

ENLARGE

Citi Bike has been forced to contend with a number of costly issues, including damage to equipment during superstorm Sandy, software glitches and a difficult 2013-14 winter that discouraged ridership. But advocates said Alta Bicycle Share, the company that operates Citi Bike through a subsidiary, also hadn't done enough to improve the system and adapt to problems as they arose.

"The bottom line is that New Yorkers deserve better," said Caroline Samponaro, a senior director at Transportation Alternatives, a nonprofit advocacy group. "The arc should be improving. All signs should be…that the demand, the usage, the attention is leading that arc up."

Representatives for Alta didn't respond to requests for comment.

One issue is that Citi Bike has proved more popular than expected with annual users who generate comparatively little revenue. Some 99,000 people pay $95 a year plus tax to be able to use the bikes for 45 minutes at a time.

The potential for far greater revenue, however, is with short-term users. Many of those were expected to be tourists, and they haven't used the bikes nearly as much as officials had anticipated, people familiar with the matter said.

A 24-hour pass costs $9.95 plus tax and a seven-day pass costs $25 plus tax. Purchasing short-term passes has proved difficult due in part to balky kiosks that accept payment for the bikes and computer glitches.

Operational difficulties have also troubled Citi Bike. The task of moving bikes to respond to the patterns of commuters—those who grab a bike in the West Village to Midtown in the morning but may not ride it home at night—has been more cumbersome than expected in New York City traffic. That has raised costs.

Also, some 50 batteries have to be changed manually at the system's 330 docking stations every night, requiring Citi Bike to hire a subcontractor just to do the job, according to people familiar with the matter.

Citi Bike has been forced to lay off some workers because of the financial strain, which has made it more difficult to operate the sprawling network and respond to customers, the people familiar with the matter said.

Earlier

New York's bike-share program is unique among large U.S. cities because it is designed to operate without public dollars, experts said. Programs in Chicago, Boston, Washington, Houston and San Francisco either use local or federal money or both, according to Corinne Kisner, a program manager at the National Association of City Transportation Officials.

Alta was always expected to seek sponsorship, in addition to Citigroup Inc.,C-0.71% which paid for the naming rights. Goldman Sachs Group Inc. lent the money up front to pay for start-up costs. Finding additional sponsors has proved challenging because the program has become so closely associated with its eponymous supporter, according to a person familiar with the matter.

But advocates were skeptical about whether Alta had been doing enough. "This program is without a doubt an asset to sponsors," said Ms. Samponaro of Transportation Alternatives. She noted the ubiquity of pictures in People magazine of New York celebrities wheeling around on the bikes. "It's the most visible [bike-share] program in the world."

The company isn't seeking public money, according to people familiar with the matter. At the hearing earlier this month, Ms. Trottenberg was asked by City Council members whether the program could get public dollars and she said it was too soon to say whether private funds could alone fund and expand the program.

"We're not there yet," Ms. Trottenberg said. "We need to make sure that the current system is stable and has a good, viable operation."

New York City Councilman Ydanis Rodriguez, who is chairman of the council's transportation committee, said he planned to introduce a bill that would require the city's transportation department to provide financial reports for Citi Bike's operations.

The city could to Citi Bike a lot of favors by constructing a safe and sustainable bike lane network in the city. The patchwork joke that we have at the moment is neither convenient nor safe. Anyone tried to pedal across the Brooklyn Bridge at rush hour?

Based on Excel spreadsheet data that can be dug out of the Citi Bike website, it looks like the revenue collected by City Bike from the start of the program through the end of 2013 was a mere $4.98 million.

Less than $5 million bucks. That's not going to do it. Even if things pick up a little and you annualize the numbers, the revenue will fall short.

Sounds like the issues they are seeing could have been known before rolling out such a system. They are not just a little in the red... they are deep in the red. I hope this does not end up getting government subsidies to survive. Love the idea but the whole economic concept is questionable.

Going into the outer boroughs will only exacerbate the problem. The population density is lower, the commuting distances are further and there are way fewer tourists. . I don't think you can raise the cost on the annual subscribers enough to net enough incremental revenue and I don't see any way that you can encourage families of tourists to use Citibikes to any great degree. Most out-of-towners I think would be terrified of biking in NYC given the cabs and heavy traffic... and all this without a bike helmet! As others have mentioned, NYC is blessed (or cursed) with an intricate, government subsidized transit system that is cost effective to the commuter and tourist. It runs in all kinds of weather. Tough to compete with that.

who would have thought of snow in the winter in NY... I am sure comrade De Blasio will fund whatever the leftist want. It doesn't have to make sense. Just get some of those printed trillions OBama is giving to any hare-brained idea the democrats comeup with....the new normal of unlimited deficits!

Why not simply raise the yearly fee since it is unrealistically low? The monthly breakdown for bike sharing is just $8, nothing compared with a Metrocard. Why should tax payers subsidize some yuppie biker riders to such a significant degree. The Metrocard is already too low compared with other MTA fares such as MetroNorth.

In Copenhagen bicycles has been admitted on the city's S-train network for some time to facilitate mixed-mode commuting, but in 2010, the state railways (DSB), which operates the system, made it free to bring bicycles on the train. Since then the number of passengers bringing their bicycle on the train have more than tripled, growing from 2.1 million to 7.3 million in 2012. To accommodate the growing number of bikes, DSB will rebuild all their S-trains by adding an extra carriage specifically for bikes by summer 2013, while keeping the flexible compartments at each end of the train to accommodate bicycles, as well as prams and wheel chairs, thus increasing bicycle capacity from 22 to 46 bicycles per train. Building on the success, DSB has launched additional bicycle initiatives such as opening bike shops in 10 stations, where customers can deliver bikes for repair on their morning commute and retrieve them on their way home. The company has also introduced various bicycle discounts in their loyalty programme, vowed to install ramps on all stairs and drastically expand bicycle parking at stations.

Other trains serving the metropolitan area, including the metro, also accept bikes. Bicycles are permitted on the city's water buses, known as the Copenhagen Harbour Buses, and since 2011 it has also possible to bring bicycles on the city's network of commuter express buses, labelled S-Buses, but unlike the s-train they all levy a fee of DKK 12 (approx.2 USD ), and only commuter trains — along with the s-trains — are exempt from a rush hour curfew. In addition 15% of train passengers in the metropolitan region cycles to the station. Taxis are required by law to carry a bike rack, and passengers can demand the driver to bring a bicycle for a small fee.

While the previous system was considered one of the first examples of modern bike share systems, it was also of little or no use to commuters, and was mainly seen as serving tourists and casual users since it was primarily designed to prevent bike theft. This was set to change with the city's new bike share system opening in 2013, which should be designed specifically for commuters, in order to function as a range extender for the public transit system. With that in mind, the cities of Copenhagen and Frederiksberg have appointed the operator of the S-train system, DSB to both tender and subsequently run the system. By the end of 2013 a new system named goBike is expected to be put into function, which will provide 1,260 modern bikes with aluminium frame, adjustable seat-height and GPS-guidance.

Why not to create pay as you ride accounts with the key. That would attract occasional Manhattan riders from other boroughs and suburban. Instead of deterring with that computer and tickets they easily use the key. This folks know their way around Manhattan not like the insecure tourists.

"...Many of those (riders) were expected to be tourists, and they haven't used the bikes nearly as much as officials had anticipated..."

Wife Unit and I tandem ride 2,000 miles a year, and I do another 3,000 on a single.I asked her how excited she would be to go on a bike trip of New York City.

She laughed out loud. Her comment, "Number 1 - In that traffic? Physics is not your friend. Number 2 - If you ever took me to Manhattan for a bike ride, we'd be communicating only through attorneys..."

Bicycle fatalities represent two percent of all traffic fatalities, and yet bicycle trips account for only one percent of all trips in the United States. http://www.pedbikeinfo.org/data/factsheet_crash.cfm So, you are two times more likely to get killed on a bike than in a car. And who knows what the injury rates are? So, then, why is public health conscious NYC (No big sodas! No smoking!) promoting more bike riding? I'd think they would want to discourage the practice, and get people back onto subways and busses -- the very safest means of transportation.

The government subsidizes everything one way or the other: Stadiums for sports teams,;highways for the auto industry (we could just build train tracks and bicycle paths!); Military protection for the oil industry. I even saw the other day how JP Morgan makes money selling EBT cards for the food stamp recipients. If it wasn't for the full faith and credit of the US government, most of Wall St.would either be dirt poor or in jail after 2008.

It is amazing how every article gets boiled down to a right vs. left argument. What's wrong with a program that lets people get some exercise, cuts down on traffic and gives tourists something else to do in the city? There are a lot worse uses of taxpayer dollars.

The thing your Wife Unit and tourists don't know is that biking in NYC is AMAZING. I'd say it's better than ostensibly bike-friendly cities like San Francisco, because there are some truly epic bike lanes here. The entire Hudson River Greenway, for instance -- from the bottom of Manhattan to the top, 97% off-road cycle paths (+ 3% low-traffic detour on streets with dedicated cycle lane, due to WTC construction.) Also: first and second avenue (at least south of 42nd-ish), Allen Street, Pike Street (where there are trees between you and the cars!!), the East River waterfront, the Williamsburg Bridge... Central Park... and Prospect Park, to boot. (Skip the Brooklyn Bridge, though. Too many pedestrians.)

Your Wife Unit is seriously missing out.

Of course, you personally could tell this to Wife Unit, but you can't simply expect tourists to be educated en masse, which is one of Citibike's problems. And advertising for this will compete for dollars/ad space offered for sale elsewhere. So I don't know whether they can solve that easily.

It would be fun to ride around Central Park. At least when I lived in NYC, they used to make some roads no car bike and walk only on Sundays in the summer. Nice and smooth pavement, nice views, lots of people watching.

In Chicago, they have tours of Chicago river by kayak and I've seen people show up.

Have you ever taken the NYC circle tour? I took it twice and I went to the top of the WTC and paid to look at the view. Once I walked from the southern tip of Manhattan all the way to 95th St. It wasn't that bad, I stopped in Greenwich Village on the way.

I'm sure that's easy for you to say from a high-end apartment just steps from Union Square. And it's pretty decent public transit, I'll give it that. But if you've spent time waiting for a bus on 10th avenue recently, or if you want to scoot a few blocks to the office from your train to Penn, then -- weather permitting -- a bike's a pretty reasonable option. Much more affordable than a taxi, and much faster than the bus or walking.

I'm more than happy to defer to the folks who have taken bike tours of NYC, and indeed it does sound interesting. Those of us not in NYC only know that which we see in pictures, and what we see when we visit the seemingly ever-busy streets.

Having taken (involuntary) rides across the hood of moving vehicles (twice,) and having lost about a square yard of hide total in the experiences, in my ignorance I'll stick with her comment that, "Physics is not your friend," and continue to ride where others aren't.

@John Smith. Again your math is weak. Pedestrians make up 50% of fatalities and bikes make up 7%??? You proved my point Pedestrians outnumber bikes what a million times??? Your own factoid proves bikes in NYC is riskier activity.

@John Bangston - Well, according to the NYC police reports, pedestrians make up over 50% of all fatalities in traffic collisions, while cyclists only make up 7%. If "riding in NYC is a health hazard", what does that make WALKING?

According to data on Citi Bike's website that details daily activity, the total revenue from the start of the program through the end of 2013 was $4.98 million. Less than $5 million bucks. That won't support the system.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.